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3 Big Things Today, February 5

Grains, Soybeans Lower in Overnight Trading; Money Managers Curb Net-Short Positions

1. Grains, Soybeans Lower on Farmer Selling, Argentina Forecast

Grains and soybeans were lower in overnight trading amid farmer selling last week and favorable weather in Argentina.

Prices early last week began to rise, pushing Chicago wheat to the highest level in three months and Kansas City futures to the highest in four months. Corn and soybeans also rose.

That, in turn, led to sales by farmers who wanted to lock in some forward sales, increasing the amount of grain and oilseeds available. Prices then dropped on Thursday and Friday, bringing the sales to a halt.

Forecasters, however, said rainfall is likely in the longer-term forecasts for Argentina, where it’s been very dry, leading to some sales overnight. Technical indicators are also pointing lower, said Tomm Pfitzenmaier from Summit Commodity Brokerage in Des Moines.

Corn futures for March delivery fell 3 ¼ cents to $3.58 ¼ a bushel overnight on the Chicago Board of Trade.

Soybean futures lost 7 ½ cents to $9.71 ¼ a bushel overnight. Soybean meal futures dropped $4.50 to $326.90 a short ton while soy oil rose 0.01 cent to 32.52 cents a pound.

Wheat for March delivery lost 5 ½ cents to $4.41 ¼ a bushel in overnight trading. Kansas City futures dropped 5 ¾ cents to $4.57 ½ a bushel.

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2. Money Managers Significantly Curb Net-Short Positions in Grains, Beans

Money managers significantly reduced their net-short positions in corn, beans and wheat last week.

Investors were net short by 129,054 corn contracts as on Jan. 30, down from 217,057 contracts a week earlier, according to the Commodity Futures Trading Commission.

Soybean net-short positions totaled 23,142 contracts, down from 81,218 contracts seven days earlier, the CFTC said in a report.

Speculative investors were net-short by 91,532 soft-red winter wheat contracts last week, down from 149,777 a week earlier, and 6,584 hard-red winter wheat contracts compared with 17,650 seven days prior, according to the government.

Fund managers likely worried about the dry weather in Argentina and the fact that the contracts were technically oversold, leading to some buying, according to analysts.

The weekly commitment of traders report from the Commodity Futures Trading Commission shows trader positions in futures markets.

The report provides positions held by commercial traders, or those using futures to hedge their physical assets; noncommercial traders, or money managers (also called large speculators); and nonreportables, or small speculators.

A net-long position indicates more traders are betting on higher prices, while a net-short position means more are betting futures will decline.

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3. Winter Weather Advisory Issued in Central Midwest as Snow, Cold Expected

A winter weather advisory is in effect for most of Iowa, northern Illinois, southern Wisconsin and counties in Indiana and Michigan near Lake Michigan, according to the National Weather Service.

Moderate snowfall is expected from early this morning into the afternoon, with 3 to 5 inches expected, the NWS said in a report early Monday morning. Roads likely will be slippery so travel isn’t advised.

Further north, in parts of northern Wisconsin and Minnesota, wind chills are expected to fall as low as minus-30 degrees Fahrenheit, the agency said.

In the southern  Plains, it’s going to again be dry, leading to elevated fire risks in much of southwestern Kansas and the Oklahoma and Texas panhandles, according to the NWS.

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